Python: Why do some packages get installed as eggs and some as "egg folders"?

A single egg file is in fact a zip archive with a particular directory structure inside. Per the zipimport documentation, only .py, .pyc, and .pyo files can be imported from zip files. So, if the package needs to import other kinds of module resources (like compiled c code; .so files, .pyd files) it won't work as a zip file.

I don't know if this is the only reason that some eggs won't work as zip archives, but I think it is the main reason.

The Internal Structure of Python Eggs, Zip Support Metadata :

If zip-safe exists, it means that the project will work properly when installed as an .egg zipfile, and conversely the existence of not-zip-safe means the project should not be installed as an .egg file [ie. as an .egg directory]. The zip_safe option to setuptools' setup() determines which file will be written. If the option isn't provided, setuptools attempts to make its own assessment of whether the package can work, based on code and content analysis.